User Account

All Pages

elasticity, Microeconomics

Assignment Help:
-1-
ASSIGNMENT #1
The demand function for Product X is given by:
Qdx = 80- 2Px- 0.05P²x -0.2Py + 4Pz + 0.01I+ 2A
Where:
Px
Price of good X
$120.00
Py
Price of related good y
$100.00
Pz
Price of related good z
$40.00
I
Income
$7000.00
A
Advertising
$250.00
a. (i) Calculate the own Price elasticity of demand (PED) for Good X.
(ii) Discuss whether revenue can be increased by increasing the price of Good X?
(iii) Illustrate on a well labelled demand graph for Product X, the Total Revenue earned when Price is equal to $120.00
[8 marks]
b. (i) Determine the Cross-Price elasticity of demand (XED) between Good X and Good Y.
(ii) Using your answer for b. (i), explain the relationship between Good X and Good Y. (Substitute, Complement etc)
(iii) Determine the Cross-Price elasticity of demand (XED) between Good X and Good Z.
(iv) Using your answer for b. (iii), explain the relationship between Good X and Good Z. (Substitute, Complement etc)
(v) Based on the solutions for parts b. (i) to (iv) above, suggest one example of an actual agricultural product that fits the description for each of the following: Product X, Product Y and Product Z.
[13 marks]
c. Consider the following two situations:
? Situation 1: There is a fifteen percent (15%) increase in the price of Good Z (Pz).
? Situation 2: There is a sixty percent (60%) decrease in the price of Good Y (Py).
-2-
Both situations highlighted above, will affect the Total Revenue earned by Producers of Good X. Explain which situation is more beneficial, to the producers of Good X, from a Total Revenue earned perspective.
[5 marks]
d. (i) Calculate the Income elasticity of demand (YED) for Good X.
(ii) Explain whether Good X is a normal good or an inferior good.
[4 marks]
e. Assume that the own Price elasticity of demand (PED) for Good X is -2 and the Income elasticity of Demand (YED) for Good X is 3.
(i) Calculate the percentage change in consumption that will occur, when income declines by twenty percent (20%) .
(ii) Using the demand function presented for Good X above, determine the new quantity of Good X demanded when income declines by twenty percent (20%) , and the Income Elasticity of Demand (YED) for Good X is 3.
[5 marks]
f. Suppose that the Cross-price elasticity of demand (XED) between Good X and Good Z is 4.
(i) How much would the price of Good Z (Pz) have to change in order to increase the consumption of Good X by twenty five percent (25%)?
(ii) Use a well-labelled illustration of the demand curve for Good X to show the effect on the demand for Good X, of the change in the Price of Good Z (PZ) as calculated in f. (i) above.

Related Discussions:- elasticity

Determine breakeven value, Assume that you have a client that is a paper ma...

Assume that you have a client that is a paper manufacturer and they have expressed concern that the government will pass a new regulation banning the use of chlorine based technolo

Money creation process, The Money Creation Process is explained below: ...

The Money Creation Process is explained below: We can now study the money supply or the creation process. Suppose the government wishes to buy pencils worth Rs. 10 for the offi

Nash equilibrium strategy, suppose your opponent is not playing her nash eq...

suppose your opponent is not playing her nash equilibrium strategy. Should you play nash equilibrium strategy?k question #Minimum 100 words accepted#

Define injections and withdrawals, Define injections and withdrawals.  ...

Define injections and withdrawals.   "The inflows in circular flow of income are known as injections". Investment, government spending and exports are there in injections "The

Money market, monetary policy

monetary policy

Oligopoly, cartels model of collusive oligopoly

cartels model of collusive oligopoly

TAXATION, WITH reference to incidence taxation,explain with the help diagra...

WITH reference to incidence taxation,explain with the help diagrams,who bears the incidence of taxation when the demand for a commodity is perfectly inelastic, perfectly elastic an

What do you meant by financialization, Q. What do you meant by Financializa...

Q. What do you meant by Financialization? Financialization: The trend under neoliberalism through that real production in the economy is accompanied by an increasing degree of

Microenconomics 3, Output 0 Fixed cost $100 Varaible Cost 40 what is the T...

Output 0 Fixed cost $100 Varaible Cost 40 what is the Total cost and Total revenue also the Profit/Loss

Nomal, what monopoly market .

what monopoly market .

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd